The Seedy Underbelly of Industry-Academia Collaborations: Part 2 - Pharma

One of the most hotly debated topics in elections across the globe in 21st Century is that of public healthcare. Logic dictates that the governments must provide affordable, accessible avenues of healthcare to its citizens in lieu of the taxes (direct and indirect) it collects. However, government’s ability to meet its healthcare goals gets severely hampered by soaring prices of essential drugs manufactured by the pharmaceutical companies.

Patents are the elixir the pharmaceutical industry thrive on. Monopolies and global empires are built on the backs of these patents. On an average, a patent usually lasts for about 20 years, however, pharmaceutical companies have mastered the art of extending them. As long as the patent backed monopoly isn’t challenged, the drugmakers can basically price according to their whim and fancy. The pricing is driven by the philosophy of maximizing returns and is largely unrelated to the cost of production (which is usually a couple of pennies a pill) or the R&D costs.

The mainstream consensus that the industry has been successful in building is that pharmaceutical companies regularly engage in “high risk” R&D activity to bring forth new medicines, and that high prices are sadly, a “necessary evil” needed to finance their operations and innovate in the field of healthcare. However, these arguments are on rather shaky grounds as research suggests 84% of worldwide funding for drug discovery research comes from government and public sources, as opposed to 12% from pharmaceutical companies. They spend, on average, 19 times more on marketing than on research.

Activist and documentary filmmaker Dylan Gray suggests that in the course of his research for his documentary “Fire in the Blood”, representatives from the pharmaceutical companies confided that in countries like South Africa and India, they price their products for the top 5% and 1.5% respectively. The rest of the populations isn’t of their interest. To ensure that they don’t miss out on a single customer who could possibly pay for their skyrocketing prices, the Pharma industry has been extensively lobbying with the leaders of Americas and EU, to impose trade tariffs and sanctions on countries such as India, Brazil and Thailand that manufacture low-cost generic drugs.

The extent of the financial clout “Big Pharma” (the pejorative moniker Pharma industry goes by) has on medical research can be gauged by its enlisting of economists and healthcare experts from prestigious universities like Stanford, University of Southern California, Harvard, University of Chicago, NYU and the like.

Precision Health Economics, a consultancy co-founded economists and healthcare academics regularly has fellow academics moonlight as consultants. They count at least 25 pharmaceutical and biotech companies and trade groups as clients. The roster includes Abbott Nutrition, AbbVie, Amgen, Biogen, Bristol-Myers Squibb, Celgene, Gilead, Intuitive Surgical, Janssen, Merck, the National Pharmaceutical Council, Novartis, Otsuka, Pfizer, PhRMA, rEVO Biologics, Shire and Takeda.

Earlier this year,a client of the firm, AbbVie; funded a special issue of the American Journal of Managed Care on Hepatitis C treatments. Half the issue was written by current or former associates of Precision Health Economics. A Stanford professor who had previously consulted for the firm served as guest editor-in-chief.

This issue was then used to persuade insurers, and government healthcare programs such as Medicare and Medicaid to cover the costs. A tough ask, considering the treatments can take as much as three months, and cost as much as $1,000 a day.

Darius Lakdawalla, a professor at University of Southern California and one of the co-founders of Precision Health Economics assured an audience of congressional staffers that even at the high prices of Hepatitis C treatments, returns to society actually exists. And that people who look at the problem from a purely cost-effectiveness perspective agree that some of these prices in some ways are too low, essentially justifying $1,000 a day treatments.

According to the firm’s brochure, it participates in many aspects of a drug’s launch, both advising on “pricing strategies” and then demonstrating the value of a drug once it comes on the market. The firm also boasts of a wide array of services it has delivered to its clients, including generating “academic publications in the world’s leading research journals” and leading (read steering) “formal public debates in prestigious, closely watched forums.”

However much one might disagree with Donald Trump’s politics (myself included), his stance against skyrocketing prices of drugs and the need to reel it in; had the industry in a tizzy. Soon enough, one of the most influential pharmaceutical trade groups, PhRMA; raised an additional $100 million for its “war chest”. For decades, PhRMA has spent millions of dollars on lobbying politicians in hopes to enlist their support on a spectrum of legislation. It has also wooed doctors, with the intention of influencing what they research, prescribe and teach. More recently, they’ve started courting health economists.

According to a ProPublica report, Precision Health Economics may now, more than ever, be well-positioned to influence the Trump administration. Tomas Philipson, an economist at the University of Chicago and the third co-founder of Precision Health Economics, reportedly served briefly as a senior health care adviser for the Trump transition team. He did not respond to requests for comment. Dr. Scott Gottlieb, reported to be a candidate for commissioner of the Food and Drug Administration, is a clinical assistant professor at New York University School of Medicine and a former “academic affiliate” of Precision Health Economics, according to its website.

Over the years, the founders of the firm have recruited an impressive cadre of high-profile academics to consult for these clients. Early in 2016, the firm boasted more than two dozen academic advisers and consultants from top universities on its website. (The site later stopped identifying professors by their university affiliations.) The list of associates has also included some policy heavyweights who recently left the government, including a top official from the Congressional Budget Office, a senior economist from the White House’s Council of Economic Advisors, and an FDA commissioner. About 75 percent of publications by the firm’s employees in the past three years have either been funded by the pharmaceutical industry or have been done in collaboration with drug companies, a ProPublica review found.

The sheer magnitude of influence of pharmaceutical companies on public health policy is enough to make one start wearing a tin foil hat (I’ve occasionally deliberated it myself); the lack of stringent policies and safeguards covering academic conflicts of interest has given rise to a new breed of scholars. The “Academics-for-hire-in-shaping-national-debate-and-policy” is a particularly foul species and undermines the very institutions, on the backs of which they have mounted their credibility and reputation.

A continuous, periodic and random reviews by universities regarding the conflict of interests of their professors and researchers may well help Universities limit their exposure to reputational risk. A small start in the right direction, better late than never.